Just when we thought mortgage rates had hit rock bottom, the past three weeks’ market activity has proved that wonders never cease. On Wednesday, the Fed shifted $400 billion of investments in short-term bonds for equal investments in long-term bonds. This action was in the hopes to spark housing activity and entice buyers with extended low rates.
Not since the early 1950′s have Americans seen such a low average in 30-year fixed rates, hovering around 4.09% this week. For a 15-year fixed, rates clocked in at an average of 3.29%, a record low.
What does this mean for the housing market? It’s an incentive, to be sure. For first time home buyers or those on the fence, it’s a no-brainer. Those buyers who grew up in the 80?s should pick up a phone and call their parents. They will be regaled with stories of interest rates in the mid-teens. Employment concerns, mounting debt, and stagnant wage rates are still a reality for many, but there is a population who stands to gain mightily from the current situation, even though a residue of caution remains high in the industry.
What About My Credit?
If your credit score is less than savory, it is possible to untangle yourself from the quagmire and get out from underneath your past choices. The upside of not-so-perfect-credit? You got yourself in, you can get yourself out, but it’s going to take determination. It would be unfortunate for a would-be homebuyer to miss the record low rates because he was ambivalent about bringing a credit score to where it needs to be for lending purposes.
Lenders’ standards are rising, which means that many first-time buyers are expected to come with 20% down payment and impressive credit scores. Add on the points associated with the loan’s low rate (1 point equals 1% of the loan amount), and it’s imperative to start doing whatever it takes to improve your score immediately.
Smart budgeting, taking advantage of your bank’s incentives and financial advising resources, and learning how to really scale back on the unnecessary “conveniences” (daily Starbucks, valet parking, excessive entertainment bills, emotional purchasing, etc.) that ruin your credit are more than worth the sacrifice, because in the end, all debt is not created equal. To owe on a property in which you invest, is different than being indebted to a credit institution for a shoe addiction. Besides, consider the freedom associated with putting in the hard work to buy yourself the peace of mind and the piece of property that will be of comfort to you for years.
Whom Do I Trust?
Repeat after me: I SWEAR TO USE A REPUTABLE MORTGAGE BROKER AND LENDER. Hopefully, if you’re in the market and looking to purchase, you have done your due diligence and chosen a real estate professional who boasts a healthy track record. Any agent worth his/her salt will have a solid grasp of which mortgage brokers are an appropriate fit for your personality and needs. Research, interview, and question every individual involved in the buying process. Get referrals and recommendations. Do everything in your power to make sure that your broker is legitimate, credible, and capable of providing for your needs and creating a smooth, efficient lending process.
That said, it doesn’t mean that the playing field hasn’t gotten a lot rockier over the last few years. It has. You may be jumping through a few hoops that those buying 10 years ago didn’t have to, but when you have the right players on your team with experience and expertise, it makes winning the championship a whole lot more likely, no matter how many hurdles you have to jump. And remember, when it comes to lenders, choose wisely. Your mortgage broker and real estate professional should educate you about the lending process and give you resources to do research on your own so that you know exactly what to expect from a lender. If something sounds too good to be true, it just may be, so exercise common sense and trust your gut.
With 30-year fixed rates closing at 3.75% on Friday, don’t look a gift horse in the mouth. Take the gift, and don’t leap into the arms of a disreputable lender or mortgage broker with pie in the sky promises.
I’m Scared of the Scrutiny!
It is a little off-putting to some when they imagine all of their financials being unearthed for approval purposes. It’s a natural reaction. What we’ve done with our money and finances is directly linked to our past choices, and not all of them are stellar. This brings up feelings and regrets, and possibly old wounds. Unfortunately, there is nothing we can do to change the past, but what’s most important is that we realize the impetus behind such “scrutiny.” The result is an investment that will serve us positively in the present and the future. This means that the past doesn’t have to hurt us, and that we can gain from all of the good choices, and learn constructive lessons from all of the mistakes we may have made, too. Roosevelt must have agreed that sometimes, we have to take a risk: “Nothing to fear, but fear itself,” he said during his inaugural address, and for the uncertainty surrounding those times, it provides a lot of perspective for us today.
And just think of how vulnerable we are to everyone and everything surrounding us on a daily basis: we fall in love and trust our hearts to partners, we cross busy streets and drive amongst speeding vehicles, we fly in tin cans with wings, and the list goes on and on. Somewhere, risk is involved if we’re going to get what we want. Acknowledge the reality that yes, your financials and information will be provided to parties looking to approve you as a sound investment, but know that without risk, there’d be no success and ultimately, that’s exactly what owning a home is: the physical manifestation of your hard work, courage, determination, and dreams.
Read more: Take the Leap Already: Mega-Low Rates Create a Timely Opportunity for Buyers | REALTOR.com® Blogs Tweet
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